Stark County group sends Northeast Ohio an angel fund

Now Northeast Ohio has two angel investment funds. A group of 34 individual “angel” investors from Stark County and surrounding areas plan to form the Impact Angel Fund, which aims to invest in high-tech startup companies across the southern portion of Northeast Ohio — from Mansfield to Canton to Youngstown. After rejecting the group's proposal twice, the Ohio Third Frontier economic development program on June 11 awarded the group a $1 million loan. Fund members are tossing another $1 million of their own money into the fund. They'll probably throw in even more cash by making personal “sidecar” investments in companies that receive money from the fund. Members of other angel funds, including North Coast Angel Fund in Mayfield Heights, regularly make sidecar investments. The individuals forming the Impact Angel Fund already have shown that they're willing to write checks. Some of the group's members, mostly business people in and around Stark County, started getting together to hear pitches from entrepreneurs in May 2013 — more than a year before they won the Third Frontier money. As a result, 15 individuals, including many who have signed on to join the Impact Angel Fund, are in the process of making an investment in InfoGPS Networks LLC, a cyber security company affiliated with Mansfield's Braintree business incubator, according to officials overseeing the fund. Individuals joining the fund also are in the process of closing on another deal, using their own money. Soon, they'll be able to start investing through the Impact Angel Fund. The group plans to invest a few hundred thousand dollars in up to five or six companies through the fund, plus whatever sidecar investments individual members make in those companies. Fund members will conduct research on the companies, with help from JumpStart, a Cleveland-based nonprofit that works with startup companies in Northeast Ohio. The group also will get help from a long list of colleges and business development groups that belong to the Stark Entrepreneurship Alliance. Among them is the Stark Development Board.A little seasoning The board helped round up investors to join the group. The original plan was to recruit land owners who become “instant millionaires” after selling their mineral rights to companies looking to capitalize on the shale oil and gas craze, according to Steve Paquette, CEO of the Stark Development Board. However, many of them weren't willing to sign up, he said. Perhaps it's for the best: Most of the people involved with the fund are “very seasoned” business people and investors, Paquette said. One of them is fund chairman Jon Elsasser, a former Timken Co. executive. Another is lead fund manager Mark Butterworth. He holds the same title with the East Central Ohio TechAngel Fund in Athens, and he previously helped run the Ohio TechAngel Funds in Columbus. So why did the Ohio Third Frontier Commission — which makes investments in high-tech companies and projects — initially reject the group's proposal? For one, the proposal's evaluators were concerned about the group's limited track record. Over the past year, however, individuals joining the Impact Angel Fund gained experience when they got together to hunt for investments and analyze their potential, Elsasser said. He wanted to form the group because he has had a good experience as a member of the East Central Ohio TechAngel Fund in Athens.More to it than money A few of that fund's better investments were made in the southern portion of Northeast Ohio. For instance, the East Central Ohio TechAngel Fund invested in Tesla Nanocoatings in North Canton. Last November, the corrosion-resistant coatings maker received what could become a $50 million investment from a South Korean company called SK Global Chemical. Tesla Nanocoatings was scheduled to receive $5 million during the first year after the investment. The Athens-based fund also invested in Arkovi, which developed a tool to help financial services firms monitor their social media accounts to make sure they don't run afoul of regulations. The Medina County company was sold in 2012 to RegEd, a compliance and risk management technology company in North Carolina. But Elsasser isn't just interested in making money. He thinks angel investing is a good way to create jobs and wealth in the region. Many other group members feel the same way, according to Paquette, of the Stark Development Board. “It's a different kind of United Way donation,” he said with a laugh.

Stark County group sends Northeast Ohio an angel fund
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